Flexible budget, Cost Accounting

Flexible Budget

Flexible budget is a budget that is designed to change in accordance along with the level of activity attained. It includes budgeting at various levels in anticipation of changes. The original budget is adjusted or flexed to reflect the real conditions whether the performance was done.

It is more useful rather than fixed budgeting because of as:

1. It gives a range of information at the planning stage that will assist in short term planning.

2. Control: It gives control data when compared along with real performance.

3. Motivation: More probably to be acceptable to management to give a positive motivational stimulus since the control data is adjusted to conform along with current activity level.